Retail Industry Applauds Trump’s Business-Friendly Tax Plan

With the lowest corporate tax rate in decades on the table, retail groups are backing the new bill.

A Republican-drafted, Trump-approved tax bill is getting positive reviews from the retail industry, as many companies are slated to receive one of the most generous corporate tax rates in history.The reform plan, proposed Thursday by the House under the title “Tax Cuts and Jobs Act” after a less detailed version was put forward in September, calls for permanently cutting the corporate tax rate to 20 percent from 35 percent, which could result in an estimated $1.5 trillion tax reduction for companies over the next decade.Despite attempts by the Trump administration to message the bill as one “bringing tax cuts for hardworking, middle-income Americans,” it's clearly focused on business.The bill’s main proposal for individuals is reducing the number of tax brackets to four — 12 percent, 25 percent, 35 percent and 39.6 percent — from seven — 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent and 39.6 percent.Income levels for the new tax brackets would see individuals making more than $67,500 and couples making more than $90,000 taxed at 25 percent; individuals making more than $200,000 and couples making more than $260,000 taxed at 35 percent, and individuals making more than $500,000 and couples making more than $1 million taxed at 39.6 percent.While the proposal’s limited brackets do reduce taxes for people making between roughly $40,000 and $415,000, it also raises taxes for lower earners by imposing a 12 percent tax rate on those making under roughly $35,000.The plan also calls for a repeal of the alternative minimum tax, which limits deductions for certain high earners, and deductions for state and local income taxes, along with a limit on the deduction for paid mortgage interest and a repeal of the estate tax, which only applies to estates valued at $11 million or more.Outside of those changes, Americans are supposed to feel the benefits of companies’ tax obligation being pushed to one of the lowest rates in history, because those savings will ostensibly go toward the creation of new and higher-paying jobs, a theme retail lobbies seem happy to promote.Noting President Trump’s demand that he have a bill to sign into law by Christmas, Matthew Shay, president and chief executive officer of the National Retail Federation who met with Trump earlier in the week, said “that would be the perfect present for the American people and the U.S. economy.”Shay added that a reduction in corporate taxes would “free up resources companies need to create jobs, and bring back investment that has gone overseas to countries with lower rates.”“There are lots of details in this bill that need to be carefully examined, but we should focus on the art of the possible rather than letting the perfect be the enemy of the good,” Shay said. “Let’s focus on the objective and get the job done.”The Financial Accountability and Corporate Transparency Coalition, a nonpartisan tax advocacy group, also characterized the tax bill as a “gift” but one to multinationals that will receive a special 12 percent tax rate on all profits currently held overseas.“This legislation is simply out of step with the American people, who overwhelmingly believe that multinational corporations should pay the same rate, if not more, on the profits they book overseas as they do on their profits earned at home,”said Clark Gascoigne, FACT’s deputy director. Jennifer Safavian, executive vice president of government affairs at the Retail Industry Leaders Association, largely echoed the supportive sentiment of the NRF, noting that U.S. retailers “pay among the highest effective corporate tax rates among all industries.”A recent research report from personal finance web site WalletHub supported Safavian’s claim, finding that companies in the S&P 100, including Amazon, Nike and Simon Property, are paying an average 27 percent overall tax rate, while international taxes can be up to 30 percent lower than domestic rates. But a link between corporate tax rates and an improved job market, something that proponents of lower taxes have been pushing for decades, perhaps most notably under President Reagan with his “trickle down” theory of economics, is widely refuted by economic groups.For the Economic Policy Group, an economic think tank, one glaring element of the reform proposal is Republican silence “on how these tax cuts will be financed.”“Cutting corporate income taxes in isolation would indeed boost post-tax returns to capital, which could lower the user cost of capital [or interest rates],” said Josh Bivens, an economist with EPI. “But unless these corporate tax cuts are paired with cuts in federal spending or tax increases elsewhere, the resulting increases in budget deficits would put upward pressure on interest rates and the [user cost of capital] so long as the economy was near full employment.”According to the Committee for a Responsible Budget, a nonpartisan group, the tax proposal is set to add $1.51 trillion to the current $666 billion federal deficit, with about $1 trillion stemming from business tax cuts.“This cost would likely be enough to cause debt to exceed the size of the economy by 2028 — bad news for the nation's fiscal and economic future,” the committee wrote in a statement.For More, See:Retail Spending More to Lobby Trump AdministrationTextile Manufacturers Want Import ‘Loophole’ Out of NAFTAFashion Pushes Past Trump on Climate Change

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